4 Key Steps To An Extraordinary Workforce

If you want an amazing workforce, it’s not just about hiring. It’s about marketing. You need to shift your thinking of the workplace as an amorphous collection of desks to a product, and embrace the concept that in order to hire the best you have to market to the workplace on multiple channels.

Here are 4 key steps to do it:

1.Reconsider your recruitment channels and their effectiveness.

If you’re just trying to glean recruiting channel data by using LCA models, it’s not going to work. First, consider candidates as buyers, and then treat them accordingly, constructing an entire journey of content for candidates to encounter.

LCA is a myth, according to many; it takes a series of clicks and re-clicks, visits, consideration, reconsideration, another jump onto the company website, and a hop to social media before a potential hire decides to apply. So make sure you’re measuring the success of your recruitment campaigns across social channels and all promotional content, as well as the job posting itself.

But don’t just rest on the same old tropes. There are niche groups, industry blogs, and new outlets like Vine, the video platform in which each video is 6 seconds or less. Vine’s tight format is ideal for showing the key aspect of a job — which certain firms, such as a mechanical engineering firm has successfully used to attract candidates. Social networking sites are among the top four top channels for sourcing candidates, according to the 2015 McQuaig Global Talent Recruitment Survey (along with employee referrals, online job boards, and corporate websites), but now that social networking is expanding in all directions, don’t just go back to those same letters of the alphabet (f, b) and think you’re done.

3. Showcase real-life, day-to-day experiences to candidates.

A can’t-stress-it-enough, hugely-massively-intensely critical factor in successful hires remains cultural fit — 43% of companies in a recent study said cultural fit was the most important factor in making a new hire. Not the much-ballyhooed cliché of “We all love foosball” cultural fit, but the very fabric of the workplace and its people. If you don’t transmit that effectively — and accurately — to a candidate, it’s a guessing game. And the disconnect between image and reality may just leave a permanent bad taste. So take off some of that slick veneer and show the grain. If you’re interviewing a candidate, invite them to conference into a daily meeting, and connect to staffers in their prospective department. Companies, don’t be shy.

According to the Talent Board, a huge takeaway from the 2015 round of CandE (Candidate Experience) awards is that candidate experience plays an ever-increasing role not only in engagement but referrals. Seventy percent of candidates said they are likely to apply to the same employers again, and 70 percent said they were likely or extremely likely to refer a peer to the employers to which they applied — whether or not they’d been hired (a majority had not).

4. Stay friendly and build that pipeline.

The fluidity of the mobile and social workforce also means we’re never really done talking, and the brevity of the chitchat means a lot of back and forth to get the whole picture. Moreover, candidate experience doesn’t stop at hire/not hire. The employer’s brand is very much at stake. Not sure about that? Here’s a compelling stat: according to a recent survey on candidate behavior by Career Builder, 65% of job seekers say they are less likely to buy from a company they didn’t hear back from after an interview.

I’ve described the talent pipeline as a great big, exaggerated funnel that requires serious tending. It’s also a resource that needs to be optimized for the right fits, so the talent is there, aligned with the right types of jobs, competencies and skills. To best pinpoint the best candidates, get to know them. Just because they were passed up for one job, don’t drop them: keep in contact. Don’t think about filling an open position. Grow that pipeline, and nurture everyone in it like the potential brilliant hire they may be.

This is a new hiring economy: complicated, competitive, but also, with a seemingly infinite reach into more and more channels. It’s like Cable TV back in its beginnings: a thousand channels was like the Wild West until we got to know it. But the switch to envisioning employees not as hires but as customers is what gives companies the edge. Make the candidate experience a wonderland of good faith and authentic interaction, a keystone of your employer brand, and as far as recruiting goes, you may have a very good year.

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About Meghan M. Biro

Meghan Biro is talent management and HR tech brand strategist, analyst, digital catalyst, author and speaker. I am the founder and CEO of TalentCulture and host of the #WorkTrends live podcast and Twitter Chat. Over my career, I have worked with early-stage ventures and global brands like Microsoft, IBM and Google, helping them recruit and empower stellar talent. I have been a guest on numerous radio shows and online forums, and has been a featured speaker at global conferences. I am the co-author of The Character-Based Leader: Instigating a Revolution of Leadership One Person at a Time, and a regular contributor at Forbes, Huffington Post, Entrepreneur and several other media outlets. I also serve on advisory boards for leading HR and technology brands.

What Gen Z’s Arrival In The Workforce Means For Recruiters

Generation Z’s arrival in the workforce means some changes are on the horizon for recruiters. This cohort, born roughly from the mid-90s to approximately 2010, will be entering the workforce in four short years, and you can bet recruiters and employers are already paying close attention to them.

This past fall, the first group of Gen Z youth began entering university. As Boomers continue to work well past traditional retirement age, four or five years from now, we’ll have an American workplace comprised of five generations.

Marketers and researchers have been obsessed with Millennials for over a decade; they are the most studied generation in history, and at 80 million strong they are an economic force to be reckoned with. HR pros have also been focused on all things related to attracting, motivating, mentoring, and retaining Millennials and now, once Gen Z is part of the workforce, recruiters will have to shift gears and also learn to work with this new, lesser-known generation. What are the important points they’ll need to know?

In general, the Generation Z cohort tends to be comprised of self-starters who have a strong desire to be autonomous. 63% of them report that they want colleges to teach them about being an entrepreneur.

42% expect to be self-employed later in life, and this percentage was higher among minorities.

Despite the high cost of higher education, 81% of Generation Z members surveyed believe going to college is extremely important.

Generation Z has a lot of anxiety around debt, not only student loan debt, and they report they are very interested in being well-educated about finances.

Interpersonal interaction is highly important to Gen Z; just as Millennials before them, communicating via technology, including social media, is far less valuable to them than face-to-face communication.

Of course Gen Z is still very young, and their opinions as they relate to future employment may well change. For example, reality is that only 6.6% of the American workforce is self-employed, making it likely that only a small percentage of those expecting to be self-employed will be as well. The future in that respect is uncertain, and this group has a lot of learning to do and experiences yet ahead of them. However, when it comes to recruiting them, here are some things that might be helpful.

Generation Z is constantly connected

Like Millennials, Gen Z is a cohort of digital natives; they have had technology and the many forms of communication that affords since birth. They are used to instant access to information and, like their older Gen Y counterparts, they are continually processing information. Like Millennials, they prefer to solve their own problems, and will turn to YouTube or other video platforms for tutorials and to troubleshoot before asking for help. They also place great value on the reviews of their peers.

For recruiters, that means being ready to communicate on a wide variety of platforms on a continual basis. In order to recruit the top talent, you will have to be as connected as they are. You’ll need to keep up with their preferred networks, which will likely always be changing, and you’ll need to be transparent about what you want, as this generation is just as skeptical of marketing as the previous one.

Flexible schedules will continue to grow in importance

With the growth of part-time and contract workers, Gen Z will more than likely assume the same attitude their Millennial predecessors did when it comes to career expectations; they will not expect to remain with the same company for more than a few years. Flexible schedules will be a big part of their world as they move farther away from the traditional 9-to-5 job structure as work becomes more about life and less about work, and they’ll likely take on a variety of part time roles.

This preference for flexible work schedules means that business will happen outside of traditional work hours, and recruiters’ own work hours will, therefore, have to be just as flexible as their Gen Z targets’ schedule are. Companies will also have to examine what are in many cases decades old policies on acceptable work hours and business norms as they seek to not only attract, but to hire and retain this workforce with wholly different preferences than the ones that came before them. In many instances this is already happening, but I believe we will see this continue to evolve in the coming years.

So how will this impact their behavior and desires as job candidates? Most of them are the product of Gen X parents, and stability will likely be very important to them. They may be both hard-working and fiscally savvy.

Sparks & Honey, in their much quoted slideshare on Gen Z, puts the number of high-schooler students who felt pressured by their parents to get jobs at 55 percent. Income and earning your keep are likely to be a big motivation for GenZ. Due to the recession, they also share the experience of living in multi-generational households, which may help considerably as they navigate a workplace comprised of several generations.

We don’t have all the answers

With its youngest members not yet in double digits, Gen Z is still maturing. There is obviously still a lot that we don’t know. This generation may have the opposite experience from the Millennials before them, where the older members experienced the booming economy, with some even getting a career foothold, before the collapse in 2008. Gen Z’s younger members may get to see a resurgent economy as they make their way out of college. Those younger members are still forming their personalities and views of the world; we would be presumptuous to think we have all of the answers already.

Generational analysis is part research, but also part theory testing. What we do know is that this second generation of digital natives, with its adaption of technology and comfort with the fast-paced changing world, will leave its mark on the American workforce as it makes its way in. As a result, everything about HR will change, in a big way. I wrote a post for my Forbes column recently where I said, “To recruit in this environment is like being part wizard, part astronaut, part diplomat, part guidance counselor,” and that’s very true.

As someone who loves change, I believe there has never been a more exciting time to be immersed in both the HR and the technology space. How do you feel about what’s on the horizon as it relates to the future of work and the impending arrival of Generation Z? I’d love to hear your thoughts.

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About Meghan M. Biro

Meghan Biro is talent management and HR tech brand strategist, analyst, digital catalyst, author and speaker. I am the founder and CEO of TalentCulture and host of the #WorkTrends live podcast and Twitter Chat. Over my career, I have worked with early-stage ventures and global brands like Microsoft, IBM and Google, helping them recruit and empower stellar talent. I have been a guest on numerous radio shows and online forums, and has been a featured speaker at global conferences. I am the co-author of The Character-Based Leader: Instigating a Revolution of Leadership One Person at a Time, and a regular contributor at Forbes, Huffington Post, Entrepreneur and several other media outlets. I also serve on advisory boards for leading HR and technology brands.

How The Digital Economy Is Defining An Entire Generation

“Innovation distinguishes between a leader and a follower.” – Steve Jobs

As a part of the last wave of Millennials joining the workforce, I have been inspired by Jobs’ definition of innovation. For years, Millennials like me have been told that we need to be faster, better, and smarter than our peers. With this thought in mind and the endless possibilities of the Internet, it’s easy to see that the digital economy is here, and it is defining my generation.

Lately we’ve all read articles proclaiming that “the digital economy and the economy are becoming one in the same. The lines are being blurred.” While this may be true, Millennials do not see this distinction. To us, it’s just the economy. Everything we do happens in the abstract digital economy – we shop digitally, get our news digitally, communicate digitally, and we take pictures digitally. In fact, the things that we don’t do digitally are few and far between.

Millennial disruption: How to get our attention in the digital economy

In this fast-moving, highly technical era, innovation and technology are ubiquitous, forcing companies to deliver immediate value to consumers. This principle is ingrained in us – it’s stark reality. One day, a brand is a world leader, promising incredible change. Then just a few weeks later, it disappears. Millennials view leaders of the emerging (digital) economy as scrappy, agile, and comfortable making decisions that disrupt the norm, and that may or may not pan out.

What does it take to earn the attention of Millennials? Here are three things you should consider:

1. Millennials appreciate innovations that reinvent product delivery and service to make life better and simpler.

Uber, Vimeo, ASOS, and Apple are some of the most successful disruptors in the current digital economy. Why? They took an already mature market and used technology to make valuable connections with their Millennial customers. These companies did not invent a new product – they reinvented the way business is done within the economy. They knew what their consumers wanted before they realized it.

Millennials thrive on these companies. In fact, we seek them out and expect them to create rapid, digital changes to our daily lives. We want to use the products they developed. We adapt quickly to the changes powered by their new ideas or technologies. With that being said, it’s not astonishing that Millennials feel the need to connect regularly and digitally.

2. It’s not technology that captures us – it’s the simplicity that technology enables.

Recently, McKinsey & Company revealed that “CEOs expect 15%–50% of their companies’ future earnings to come from disruptive technology.” Considering this statistic, it may come as a surprise to these executives that buzzwords – including cloud, diversity, innovation, the Internet of Things, and future of work – does not resonate with us. Sure, we were raised on these terms, but it’s such a part of our culture that we do not think about it. We expect companies to deeply embed this technology now.

What we really crave is technology-enabled simplicity in every aspect of our lives. If something is too complicated to navigate, most of us stop using the product. And why not? It does not add value if we cannot use it immediately.

Many experts claim that this is unique to Millennials, but it truly isn’t. It might just be more obvious and prevalent with us. Some might translate our never-ending desire for simplicity into laziness. Yet striving to make daily activities simpler with the use of technology has been seen throughout history. Millennials just happen to be the first generation to be completely reliant on technology, simplicity, and digitally powered “personal” connections.

3. Millennials keep an eye on where and how the next technology revolution will begin.

Within the next few years Millennials will be the largest generation in the workforce. As a result, the onslaught of coverage on the evolution of technology will most likely be phased out. While the history of technology is significant for our predecessors, this not an overly important story for Millennials because we have not seen the technology evolution ourselves. For us, the digital revolution is a fact of life.

Companies like SAP, Amazon, and Apple did not invent the wheel. Rather, they were able to create a new digital future. For a company to be successful, senior leaders must demonstrate a talent for R&D genius as well as fortune-telling. They need to develop easy-to-use, brilliantly designed products, market them effectively to the masses, and maintain their product elite. It’s not easy, but the companies that upend an entire industry are successfully balancing these tasks.

Disruption can happen anywhere and at any time. Get ready!

Across every industry, big players are threatened — not only by well-known competitors, but by small teams sitting in a garage drafting new ideas that could turn the market upside down. In reality, anyone, anywhere, at any time can cause disruption and bring an idea to life.

Take my employer SAP, for example. With the creation of SAP S/4HANA, we are disrupting the tech market as we help our customers engage in digital transformation. By removing data warehousing and enabling real-time operations, companies are reimagining their future. Organizations such as La Trobe University, the NFL, and Adidas have made it easy to understand and conceptualize the effects using data in real time. But only time will tell whether Millennials will ever realize how much disruption was needed to get where we are today.

Find out how SAP Services & Support you can minimize the impact of disruption and maximize the success of your business. Read SAP S/4HANA customer success stories, visit the SAP Services HUB, or visit the customer testimonial page on SAP.com.

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About Julia Caruso

Julia Caruso is a Global Audience Marketing Specialist at SAP. She is responsible for developing strategic digital media plans and working with senior executives to create high level content for SAP S/4HANA and SAP Activate.

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Everything You Know About Leadership Is Wrong

Companies that begin life digitally operate differently from the incumbents they threaten and unseat. Employees at digital companies don’t waste time gathering and analyzing information; they use live data to make decisions. They don’t need to wade through organizational hierarchies to get permission to act; their leaders explain business goals and then empower them to use their best judgment.

To compete, incumbent companies have to transform not only decision-making processes and hierarchies that have hardened over decades but also the nature of leadership itself. The leadership strategies and behaviors that drove success in the knowledge economy aren’t sufficient to navigate a successful transition to the digital economy.

Two-thirds of Global 2000 CEOs will center their business strategies on digital transformation by the end of 2017, according to IDC. But few business executives today have the leadership mindset or skills necessary for these strategies to succeed, according to the Leaders 2020 study conducted recently by SAP, Oxford Economics, and McChrystal Group. The study found that only 16% of executives are ready to lead their companies through this transformation.

Leaders must lead differently if their companies are to transition to the digital economy and reap its rewards. In 10 years, for example, 75% of the companies that were listed on the S&P 500 Index in 2012 will have been replaced, according to a study by Innosight. Meanwhile, global competition is heating up. Rising disposable income in emerging economies has sparked the advent of new rivals—and in a survey by consulting firm Accenture, 70% of marketers in those economies expressed confidence in their ability to execute a digital business transformation. In mature economies, the figure was just 38%.

But it’s not too late to learn the essentials of digital leadership.

Communicate the Digital Mission

Fostering an organization whose employees have the skills, tools, authority, and information they need to make decisions in the moment begins with leaders who can formulate and communicate the digital mission. Randall Stephenson, chairman and CEO of AT&T, understands the forces driving digital transformation. Under his guidance, AT&T’s lines of business have expanded—both organically and through acquisitions—to include extensive digital operations, like DirecTV and potentially, as of press time, Time Warner, according to The New York Times. So even as AT&T continues to compete for market share against established and startup telecommunications providers, the company is going head-to-head against digitally based companies like Amazon and Google.

Every business must become digital and work in the cloud, but the change doesn’t merely mean making acquisitions, buying new technology, and rewriting org charts. A new digital workforce is needed as well to meet the transformation challenge. And like the companies they serve, the members of this new workforce will have to develop new abilities and prepare to take on new roles.

That reality is the impetus for Stephenson’s ambitious initiative to transform his company by transforming his team. Through a program launched nearly three years ago, AT&T is underwriting education and professional development opportunities for employees who are willing to pursue the studies on their own time. Those who take advantage of the offer can learn new computing skills that align with the company’s blueprint for digital transformation.

AT&T’s education plan shows the extent to which data is driving a profound change in employees’ daily tasks, functions, and core value to the company. Until recently, businesses sought knowledge workers who were capable of reviewing, assessing, analyzing, and disseminating data in support of decision making. But in the digital economy, companies must be able to respond in the moment to customer, market, and competitive changes. Reviewing masses of data and following traditional hierarchical decision-making processes defeats that goal. To succeed and, in truth, to survive, companies must have that data available when they need it and make a decision in the right moment.

Invest in Understanding How Work Gets Done

With that in mind, digital leaders must invest in understanding how work gets done and then commit to adjusting processes, deploying the right technology to support those processes, and measuring what adds value for customers and, therefore, to the bottom line. Yet only half of the executives surveyed by Oxford Economics rated their companies’ senior leaders as highly proficient in using the technology necessary for transformation.

Digital Leadership in Hard Numbers

Executives who have already established themselves as digital leaders demonstrate the value of their initiatives in hard numbers, according to the Oxford Economics study Leaders 2020. For example, their companies are much more likely to sustain top financial performance in terms of both revenue and profitability. Where leadership has embraced digital, companies:

Are 38% more likely to report strong revenue and profit growth

Have more mature strategies and programs for hiring skilled talent

Report one and a half times more effective collaboration, which contributes to productivity

What’s more, becoming digitally savvy isn’t enough. Leaders’ aptitude for cultivating teams and work environments that can make good use of technology is also essential. Indeed, nearly 80% of the companies considered farthest along in digital maturity make data-driven decisions, according to the Oxford Economics study (see Digital Leadership in Hard Numbers). Meanwhile, 53% of respondents were found to be clinging to old-school decision-making styles and failing to map decisions to strategy. As a result, only 46% qualified as equipped to make decisions in real time.

Lead by Simplifying

Digital leaders make it a priority to continually simplify processes and decision-making procedures to reduce institutionalized complexity and bureaucracy. These impediments take a real toll. A study by the Economist Intelligence Unit found that organizational complexity costs businesses up to 10% of profits. Flattening organizational hierarchies and encouraging transparency and organization-wide inclusivity in the decision-making process can help erase such losses, according to the Oxford Economics study.

Achieving these goals doesn’t require a committee. Empowering people at lower levels to make business-critical decisions based on available data has a natural flattening effect on the hierarchy. And as individuals and the enterprise as a whole become accustomed to having access to real-time data that speeds responsiveness, decision making becomes distributed across the organization.

That doesn’t automatically mean that the organizational pyramid is dead. Rather, it empowers employees, the organization, and leadership by placing responsibility for individual responses and actions in the hands of the people best equipped to carry them out, take ownership of the results, and ensure their success. This key characteristic distinguishes digital workers from knowledge workers: they have access to the data necessary to drive the right decisions at the right time, regardless of where they appear on the organizational chart. This not only empowers people at lower levels but also eases the bureaucratic burden on upper management, which is then freer to focus its time and energy on leading the organization forward instead of directing its day-to-day and even minute-by-minute activities.

Lead by Getting Ahead of the Customer

Creating an organization that’s capable of capturing data and making decisions in the moment can transform customer relationships. Besides responding to immediate customer needs, digitally transformed organizations can also predict emerging requirements, even before the customer is fully conscious of them.

To achieve this, digital leaders must be able to view digital in terms of its ability to support innovation: to make it possible for the business to deliver an array of services and advantages that it wasn’t possible to deliver before.

“The challenge is to not ask the question, ‘How does this affect my business?’ That’s inherently a defensive, firm-centric question,” says David Rogers, author of The Digital Transformation Playbook and a member of the faculty at Columbia Business School. “Instead, firms need to look at every new technology and digital capability and ask, ‘How might this allow us to offer new forms of value to our customers that we could not have done in the past?’ And be continuously looking.”

Being plugged into digital’s power to transform customer relationships thus allows an executive to evolve into a digital leader with the vision and the tools necessary to conceive and implement continuous innovation.

Concentrate on Team Dynamics and Employee Engagement

Millennial leadership is well suited to understand the human side of digital transformation. Digital leaders of older generations must recognize the importance of inviting and acting on input from Millennials, which is essential to inspiring them to perform at their best—and to achieving the overall goals of digital transformation.

Digital leaders must also understand that encouraging diversity in their workforce isn’t simply a matter of fairness; it’s also a source of competitive advantage. Leaders who build diverse organizations have more engaged, productive employees, as well as higher levels of innovation, according to the Oxford Economics study. This in turn leads to better bottom-line results. Companies that reported higher revenue and profitability growth were more likely to cite the positive impact of diversity on their numbers.

Despite this, the study found that only 60% of companies have adequate programs to ensure that they are developing a digital workforce. The shortfall is hurting companies’ ability to hire and retain talent: only 53% say they are successful in attracting qualified applicants.

This problem will only get worse as Baby Boomers exit the workforce. Digital leaders will be increasingly pressured to maintain stability and continuity in their workforces. The challenge will be especially difficult for companies that lag in meeting the expectations of professionals who have entered the workforce in the era of the gig economy. They expect to make numerous career moves and don’t necessarily see length of tenure as a priority.

Thus, companies need processes for bringing new staff members up to speed as quickly as possible while optimizing their productivity, encouraging them to make constructive contributions to the business, and motivating them to deliver their best performance. They must also develop programs for continuous learning and job rotations to engage and retain workers who may not otherwise remain with the company as long as they would have in past generations.

Address the Generation Gap

Millennials and Generation Z have different expectations of what it means to be an employee and how to use technology than other generations do. They expect collaboration across the hierarchy, which is important to keeping them engaged with the organization and with their personal passions. Fostering a sense of meaning within the workplace, then, is another element of digital leadership; leaders must make the company a place where employees feel as engaged and rewarded as they can be and can do their best work.

In this respect and many others, most businesses are contending with a generation gap. The Oxford Economics study found that in comparison to older executives, Millennial executives have a much more pessimistic view of their organization’s ability to perform well in such key areas as using technology to achieve competitive advantage, collaborating internally, inspiring employees, and fostering an organizational culture that promotes feedback and reduces bureaucracy. In addition, the Millennials are more conscious of—and place a premium on—diversity and its benefits. Addressing that generational disconnect is key to digital leadership.

When today’s mid- and late-career executives entered the workforce, it was understood that younger workers invested the early years of their professional lives paying their dues. But that model no longer works in a market in which a company’s future depends on an approach to digital transformation that comes most naturally to younger executives. And those executives will not invest themselves and their expertise in companies that fail to recognize and respect Millennial workplace priorities.

Help Employees Address Future Challenges

Digital transformation isn’t just altering employees’ expectations of their careers. It’s also remaking jobs and what work itself entails. In response to a survey by consulting firm Cap Gemini, 77% of companies reported that they saw digital skill gaps as the chief obstacle to their digital transformation.

Their concerns are well founded. Oxford University examined 702 job descriptions across all job types and found that 47% were likely to be replaced by technology within a decade. Another 19% were moderately likely to be replaced. With that in mind, part of the leadership challenge in digital transformation is anticipating how people will work in this world and how artificial intelligence, robots, and people will be integrated into a new and more efficient workforce. How will people interact with these digital forces in the workplace? What will it mean in human terms?

Digital leaders can’t expect employees to keep up with these changes on their own: things are simply moving too quickly. AT&T’s Stephenson recognizes this. The New York Times reported that the company’s digital transformation is projected to make 30% of current jobs obsolete by 2020. That’s why, to get ahead of that challenge, Stephenson ordered the creation of AT&T’s training program, which includes an extensive curriculum of online and classroom courses.

This approach illustrates a key characteristic of digital leaders: the ability to think conscientiously about where their companies are headed, what skills their people will need, and how they can help them develop the skills they’ll need as their roles evolve. Digital leaders are also able to articulately communicate to employees where the world is headed so that they are motivated to get there and be productive now and in the future.

Unleash a New Generation of Executives

Companies can no longer afford to delay recognizing the digital sea change that is transforming decision making and the capacity to respond in real time to challenges and opportunities. Led by Millennial executives, the new digital workforce is ready to spark unprecedented performance improvements in organizations that do not constrain their ability to communicate, collaborate, and contribute. Digital leaders are devising strategies for harnessing their energy, enthusiasm, and innate understanding of digital capacities to achieve higher levels of productivity and profitability. The remaining leaders face a choice: embrace this change or get left behind. D!

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About Michael Rander

Michael Rander is the Global Research Director for Future Of Work at SAP. He is an experienced project manager, strategic and competitive market researcher, operations manager as well as an avid photographer, athlete, traveler and entrepreneur. Share your thoughts with Michael on Twitter @michaelrander.

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What Does Blockchain Mean To The CFO?

In my previous blogs, I’ve stated that CFOs need to play a strong, active role as an independent challenger for the business while assessing risks – balancing risk and opportunity for the business. I’ve also covered changes to our role as digitization begins to envelop our organizations. The digital economy will impact many things, that we can be sure of.

In the digital economy, collaboration is increasingly important, and the task of the CFO is to establish this collaboration role, and someone needs to establish collaborative digital finance processes and safeguard their effectiveness and efficiency. In many cases, CFOs have taken that role. Looking to next year, there’s a huge expectation that the technology known as “blockchain” will gain greater prominence in practical business applications, and I believe CFOs can and should enter the picture of this discussion early on. It’s not the realm of the technologists alone, and many are pointing towards blockchain as an underpinning of a digital economy.

The blockchain movement and its accompanying technological capabilities are incredibly intriguing, and a quick Google search delivers about 416,000 results, underscoring the interest. If we can build use cases and applications, blockchain can radically change the way we do business. As a CFO, I need to be mindful of risks, and some associated with this technology are difficult to comprehend upon first reflection. However, as I wrote previously, this is typical of the CFO in the digital economy. Both on the business and compliance sides, we are able to leverage traditional skill sets and our knowledge while stepping into unknown territory in both areas at the same time.

Singapore has announced the city state’s central bank will explore blockchain by launching a pilot project with the country’s stock exchange and eight local and foreign banks to use the technology for interbank payments. While blockchain technology, which emerged from bitcoin, is expected to draw interest by banks and other centralized institutions, it’s expected that companies like Amazon, Facebook, and Google will be early adopters as well.

Being mindful of risks

Given that a lot of information is shared in a blockchain, I wonder what it would do to the system – beginning with fraud and going onward along the risk chain – if and how someone could break into it. I’m sure there’s a good answer – maybe hackers could hardly or never access all of information, given its distributed ledgers. But my point here is that the role as a CFO is to assess the risk and benefit. The latter would include an analysis of the energy footprint of blockchain technology. Is the hardware used sufficiently and is it energy efficient? Are the algorithms computationally efficient in this regard?

Blockchain promises a huge benefit because it increases how we do business and the speed at which it can be conducted. It promises to eliminate the intermediaries and bring new life back to some professions. Some of the technology’s early adopters are public audit firms, and their perspective is in the public interest. I saw a presentation from a utilities company, and it was mind boggling what they’re exploring with blockchain. They can see a case extending collaboration and interaction all the way to the customer in a way they’ve been previously unable to achieve.

From the finance perspective, there’s a limit to optimizing processes and the number of people involved. Even with full robotics, oversight is needed, i.e., someone who watches the robot. When we reach those limits, we turn to technology to help increase volumes and transaction processes. I see a lot of potential for blockchain in this regard, with new, associated business models that have potential.

A hot topic in financial services

At I recent forum for financial services, I co-hosted a dinner where blockchain was the topic. It was amazing to see how people had picked up on the topic, and there were a lot of questions. Many had similar questions about exploring the risks and benefits, and I think it’s fair that everyone took away the sense that they need to keep their eyes on and learn more about it.

Consistently, I see a lot of people taking note, especially those close to the financial market or treasury. Predictably, IT departments are keenly curious, but I think CFOs need to step up their game and begin looking more closely, forming points of view to guide their businesses. It ties in with traditional CFO skills like business modeling, risk and compliance, and advising the business. This remains at the core of our role.

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About Matthias Heiden

Dr. Matthias Heiden, senior vice president, regional CFO, Middle and Eastern Europe (MEE), is responsible for the field finance organization of MEE. In this role, he supports the organization in managing P&L, continuously driving strategic finance transformation initiatives initiated by Corporate Finance together with the other regional CFOs. This team helps improve business-related processes and supports the Market Unit CFOs in their role as business facilitator and transformation agent.